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Regulators Approve Qwest Sale To CenturyLink

Colorado utilities commission signs off on the $22 billion deal for the former Baby Bell wireline operation.

W. David Gardner

December 16, 2010

2 Min Read

And then there were two -- Baby Bells, that is.

In approving Qwest's merger with CenturyLink Wednesday, Colorado regulators cleared the field of one of the last remaining Regional Bell Operating Systems (RBOCs), leaving AT&T and Verizon Communications as the two remaining Bell units that were created when Ma Bell, also called AT&T, was broken up more than two decades ago.

CenturyLink is paying $22 billion in stock and debt for Qwest, based in Denver. The Colorado Public Utilities Commission (PUC) placed some conditions on the deal, but also rejected a plea by consumer advocates who wanted improved customer-service benchmarks.

"I don't perceive that there's a problem that needs fixing," said PUC chairman Ron Binz at the Wednesday hearing. Noting that Qwest and its earlier U.S. West incarnation have been "pillars of the community," Binz added that the firm will be required to continue its previous level of charitable donations. The company will also be required to spend $70 million to improve broadband infrastructure in Colorado.

The new firm will be based at CenturyLink's headquarters in Louisiana.

The merged company has said it expects streamlining resulting from the acquisition will save $575 million in annual savings. However, the Colorado Consumer Counsel had expressed concerns that the cuts would result in service degradations.

Qwest will fade away after a long history. Its stock boomed in the telecom bubble of the late 1990s, but collapsed when the bubble burst, leaving the company with massive debt. Its CEO, Joe Nacchio, was charged with various criminal stock trading activities and, after being found guilty of some of the charges, was subsequently sentenced to a jail term in a Pennsylvania prison. The company also suffered financially because it never had its own mobile phone operation.

AT&T and Verizon remain the sole Bell survivors and, since they are financially healthy, they are likely to remain so. The firms compete vigorously in the mobile phone space, but not in wireline and cable TV access.


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